First Beverage Group’s Townsend Ziebold: ‘It’s a Buyers Market’

Brewbound.com:

By Chris Furnari

After six consecutive years of double-digit growth (2010-2015) within the craft beer segment, and a three-year period of intense merger-and-acquisition activity (2014-2016), brewery multiples are beginning to normalize, according to First Beverage Group managing partner Townsend Ziebold.

Ziebold, who broke down the current state of craft beer investment at the Brewbound Session business conference held in New York City earlier this month, believes it’s become a “buyer’s market.”

“There is no question that 2014, ’15 and ’16 were what they call a ‘seller’s market,’” he told an audience of nearly 200 beer industry professionals. “But I do think the market has changed.”

During those years, large strategic buyers like Anheuser-Busch InBev, MillerCoors, Constellation Brands and Heineken paid hundreds of millions of dollars for smaller beer companies, in an attempt to compete more aggressively within a red-hot craft beer segment.

But now that most of the major strategic buyers have their horses, and category-wide growth has slowed as well, Ziebold believes brewery multiples have come back down to more reasonable levels, and that they will stay there.

“All of that tips it into a buyer’s market, where the leverage has transferred from the seller to the buyer,” he said, adding that more craft brewery owners are now looking to transact, a phenomenon that lessens the “scarcity value” of each company.

According to Ziebold, brewery multiples climbed high as 25X EBITDA in 2014 and 2015, up from the low end of 6X EBITDA in 2007.

But some craft brewery entrepreneurs will still be able to cash in.

“I still think you can get 2015 and 2016 multiples in today’s market,” Ziebold said, highlighting quality beer, a diverse portfolio and healthy flagship trends as factors that could impact valuation.